Brent crude climbed to $104.90 per barrel, up 3.67%, by 1:40 p.m. WAT on Thursday, moving within striking distance of the $105 mark as escalating U.S.-Iran hostilities and attacks on oil shipping intensified concerns over global supply.
U.S. West Texas Intermediate crude also surged to $99.68 per barrel, gaining 3.78%, leaving the U.S. benchmark close to the $100 threshold as traders assessed the possibility of a prolonged disruption to Middle East oil flows.
The latest advance extends a sharp rally that has pushed Brent above $100 for the first time since July, with the market increasingly pricing in a longer-lasting supply shock as violence around key maritime routes escalates.
The Strait of Hormuz remains at the centre of the supply concerns. Crude movements through the waterway have fallen sharply from levels recorded before the latest escalation, while tanker attacks have made shipping through the route increasingly difficult.
Rystad Energy estimates that flows through Hormuz have dropped to below 2 million barrels per day, compared with roughly 8 million to 9 million bpd before fighting resumed. Reuters also reported that Kpler data showed no very large crude carrier had exited the strait since September 2.
The disruption is significant because Hormuz is one of the world's most important oil transit routes, linking major Middle Eastern producers to international markets.
The supply threat has intensified alongside a widening confrontation between Washington and Tehran.
The United States has destroyed Iranian oil tankers during the conflict, while Iran has responded with attacks on ships around the region and warned of further restrictions on maritime traffic. Iran-aligned Houthi forces have also increased pressure on shipping and energy infrastructure in the Red Sea and Saudi Arabia.
Alternative export routes are providing some relief, but they cannot completely offset the disruption.
The United Arab Emirates can redirect crude through its pipeline to Fujairah outside Hormuz. Iraq has access to routes towards Turkey and the Mediterranean, while Saudi Arabia can use its East-West pipeline to move crude towards Yanbu on the Red Sea.
Those alternatives, however, are also exposed to geopolitical and security risks, particularly as attacks on Saudi energy infrastructure continue.
The tightening supply picture is being compounded by falling inventories.
The International Energy Agency reported that 8.3 million barrels per day of Middle Eastern oil production remained shut in as of July, while global oil inventories fell by 69 million barrels during the month. Continued inventory withdrawals could provide a temporary buffer, but prolonged disruption would steadily reduce that cushion.
Physical crude markets are also showing signs of strength, with several regional benchmarks already trading above $100 per barrel. Brent futures have now joined those grades above the psychologically important threshold.
The market's concern is increasingly shifting from whether oil can cross $100 to how long prices can remain above it.
A prolonged conflict could keep crude elevated if tanker traffic remains restricted, inventories continue to decline and alternative export routes fail to compensate for lost Middle Eastern supplies.
Demand could add further support in the final months of the year, when global oil consumption typically strengthens. While sustained high prices can eventually weaken demand, oil remains essential to transportation, manufacturing, aviation and other major economic activities.
With Brent now at $104.90 and WTI at $99.68, another escalation in the Middle East could push both benchmarks through their next major psychological thresholds.